Zimmer Biomet Holdings, Inc. faces an investor class action lawsuit, alleging that the company misled investors about problems in its supply chain that affected revenues from its hip and knee implant products.
The class action lawsuit was filed on behalf of investors who bought securities for Zimmer Biomet between September 7 and October 31, 2016, indicating that investors suffered losses due to false or misleading statements made by the manufacturer.
The complaint comes as a result of an October 31 press release announcing the company’s third quarter 2016 financial results, which indicated that it suffered weak sales due to changes in its supply chain structure throughout the year. The changes resulted in shortages of hip and knee replacement system components, as well as the medical devices used to implant them.
The changes caused the company to miss earlier estimates for revenues for the quarter, and it dropped its expectations for the rest of the year as a result. Company executives held a conference call for investors after the release and announced that the supply chain issues were to blame for the company missing its revenue goals.
The lawsuit indicates that the company knew about the supply chain changes, but failed to warn investors of the potential supply shortfalls.
Zimmer Biomet has had a number of problems with its hip and knee impants in recent years, some resulting in massive litigation.
In July, the FDA sent a warning letter to the company indicating that a factory in Montreal that makes its Zimmer knee replacement system components, including its iAssist guidance system, had numerous quality control issues that could lead to defective parts.
The company also faced hundreds of Zimmer NexGen knee replacement lawsuits in previous years, which plaintiffs claimed were defectively designed and could fail after just a few years.
In addition, in 2014, the company’s Biomet division agreed to pay at least $56 million to settle more than 2,400 Biomet M2A Magnum hip replacement system lawsuits. Plaintiffs in those cases also indicated that the implants were defectively designed and prone to failure, resulting in the need for revision surgery.
Investors who wish to be a lead plaintiff in the latest class action lawsuit have until a January 31 lead plaintiff motion deadline to participate. However, they can also take no action and be a passive member of the class action lawsuit, if it is certified and ultimately successful.